GSANewEngland2013_Percent_of_Load_Hedged_Price_Explanation.doc

GSA Solicitation No. GS-00P-13-BSD-0969 New England States Percent of Load Hedged Pricing Product Explanation

GSA is seeking pricing for a “percentage of load hedged” product for a term of 24 months and 36 months for certain pricing groups. The bid for these groups should include the components listed below for the hedged (fixed) and indexed portion of the service obligation, as applicable. Bids will be submitted as two parameters: 1) a fixed price for the percentage amount of the load to be hedged, and 2) an index adder price for the entire load.

For the percentage of load hedged price product submission, bids will be determined and evaluated as follows:

The two input prices will be used to calculate a resulting Average Submitted Price for the load. This Average Submitted Price for the load will be the price that bidders see as the Low Bid designated on the platform. Therefore, it is important that bidders fully understand the below calculation and the associated inputs:

Calculation

Average Submitted Price (Low Bid displayed) = ((Fixed Price usage at the ISO load zone * Fixed Price Bid) + (Index usage at the ISO load zone * Index Wholesale Price Estimate) + (Total usage at the meter * Index Adder Bid))/Total usage (at the meter)

Inputs

1. Percent of Load Hedged – percent of kWh to be hedged

2. Hedge Time Frame (a) - RTC (7 x 24), Peak (5x16), Off Peak

3. Hedge Time Frame (b) - all months or specific months

4. Total Customer Usage at the Meter (LDU) – per the historical LDU data

5. Fixed Hedged Price Usage at the Meter = the estimated kWh purchased for the hedge at the LDU (before losses) using the percentage to be hedged for the time frames to be hedged

6. Fixed Hedged Price Usage at the ISO load zone = The Fixed Hedged Price Usage at the Meter multiplied by 1 plus the loss factor

7. Loss Factor = the loss factor between the ISO load zone and the customer meter used in the calculation for the applicable rate code (or weighted average of loss factors if examining a number of accounts)

8. Index Wholesale Price Estimate = a forward looking estimate of the price for the exposed load over the term of the contract

9. Indexed Price Usage at ISO load zone = the kWh purchased for the unhedged portion at the LDU multiplied by 1 plus the loss factor

10. Indexed price usage at the Meter (LDU) = the kWh at the meter that is not being hedged (Total Customer Usage at the Meter less the Fixed Hedge Price Usage at the Meter)

11. Total Usage at ISO Load Zone = (Fixed Hedged Price Usage at the ISO Load Zone + Indexed Price Usage at ISO Load Zone).

12. Fixed Hedged Price Bid = submitted bid (“Fixed Hedged Price Bid Amount” on platform)

13. Index Bid = submitted bid (“Index Adder Bid Amount” on platform) Items 1-11 will be provided to you prior to the auction in the attached Excel Spreadsheet. Items 12 - 13 are the bids submitted through the platform.